Malta launches its first alternative investment ETF under new Securitization Act

Opalesque Industry Update - The first Exchange Traded Instrument (ETI) issued under the Malta Securitization Act went live recently on the European Wholesale Securities Market (EWSM). The "Dynamic Trading Strategies ETI" is linked to and backed by a performance linked bond issued by a Special Purpose Acquisition Vehicle allowable under the Securitization Act of Malta with the sole purpose of holding Managed Accounts at Interactive Brokers LLC and Sensus Capital Markets plc.

The EWSM is a joint venture between the Malta Stock Exchange and the Irish Stock Exchange and acts as an EU regulated market for arrangers and issuers of wholesale debt products.

Argentarius ETI Management is the arranger for this innovative financial product which is issued by ETI Securities one of the Special Purpose Vehicles (SPV) incorporated under the Securitisation Act in Malta which delivers a high level of protection for the investors within a favourable regulatory framework and with the added advantages of special tax arrangements.

Andreas Woelfl, Argentarius’s CEO said “This really is a first for Malta and clearly demonstrates the advantages of Malta as a domicile for the issuance of Exchange Traded Instruments backed by and linked to the performance of Alternative Investments”

This particular issue is the first of its kind in Malta because the Exchange Traded Instrument (ETI) is linked by way of a performance bond to the underlying assets and so its performance is derived from that of a Management Account consisting of commodity futures contracts with the result that the ETI is an eligible asset class for a UCITS Fund even though the commodity futures contracts do not qualify as eligible assets under the UCITS directive.

For the UCITS Fund Manager this means that Argentarius can offer a diversification into additional asset classes, especially alternative investments asset classes with a reasonable cost structure.

The ETI structure was confirmed by the European Commission as falling within the definition of an eligible UCITS security regardless of the eligibility of the underlying assets as long as certain criteria are met. Issuance on a regulated market such as EWSM is one of those criteria and so the availability of this exchange in Malta is a key factor for UCITS Fund Managers that seek to increase diversification within their funds.

For Argentarius this heralds the launch of their european-wide expansion “We are currently talking to many of the leading advisers to the fund industry in Germany, Malta, Switzerland and the UK and we are looking at several new issues currently” said Andreas Woelfl.